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All right, let’s get started. Hey there, freedom founders. I’m the founder of Mixergy.com, home of the ambitious upstart. Over 600 entrepreneurs so far have come here to tell you their stories so you can learn from them , pick up the best lessons and use them in your business and hopefully do what today’s guest is doing as some point in your life, which is come back and share what you learned after you scored your big hit. Big question for this interview is how do you build a marketplace where you need both buyers and sellers to show up at the same time?

Iain MacDonald is the co-founder of SkillPages, the skill base social network. The site has over 3 million members and I imagine many of you still are not member and haven’t’ heard of it, which is probably why Ian is here to do this interview and the reason I had him here is because I want to find out how he got 3 million members and how, more importantly, can you do it based on what we learn from his store, Ian, welcome.

Iain: Thank you very much, nice to talk to you Andrew.

Andrew: Let’s explain what SkillPages is with a specific example. Who’s got a problem that they would show up at skillpages.com to solve?

Iain: Skill Pages is a skill based social directory. What we do, is we connect people with skills to people who need them. To give an example, every day 100 thousand people are presented with new opportunities through skill pages. So, say you’re looking for a web designer, you can go to Skill Pages, find people who have that skill, see who they are, what they do, see examples of what they do and then you can see if you share any real life connections to them. So, maybe you have a friend in common, maybe you went to school with this guy, maybe you worked with him previously in a previous company. So the whole concept is people like to do business with people they know or people they have a connection with and we just make doing that a lot easier.

Andrew: OK. And the idea came to you because you had a problem yourself, what was the problem?

Iain: That’s right. About two years ago, Andrew, I needed to get the tress cut down in my back yard so, I spent a bit of time trying to find a good tree cutter. I called my friends and family and asked “Does anybody know a good tree cutter?” and it turns out that they didn’t, but that process had taken me quite a long time. So then, I went to Google and I found lots of people who said they are very good tree cutters so I contacted them, they came out, they gave me quotes but we had all types of guys coming out.

One guy came out with a 40 foot truck and was saying he could cut it all down in ten seconds. I looked at his truck and I though he probably cut a root through the Rockies rather than cut down my couple trees in my back yard and then I got other guys who I just didn’t like the look of them, I wasn’t happy or comfortable with the trustworthiness of the guys. So, the whole process just took me a long time, and I felt what was needed was a large scale, simple way of connecting people with skills to people who need them within a trusted environment.

So, subsequently, I developed SkillPages, I went to look for that tree cutter, I found him and I saw that he was the son of a friend of my dad’s. As a result of that, I was confident that he was honest, that he was trustworthy, that he was reliable and I was comfortable with him coming out and he did a great job and cut down my trees for a reasonable price. And I thought, you know what, there must be a lot of people in my extended network that have great skill and if only it was easy to find them and connect with them. That would be a useful tool and that’s what prompted me to develop the platform.

Andrew: I understand the idea for the business and I understand the idea of how useful it is. My drive for this interview is to find out how you got to three million people because, as you know, you got competitors, you and I talked before the interview about Zarly, there are others out there who are gunning for this space, and they don’t have your three million members as far as I know. Before this interview I went through your site, and I put together a few theories on how you grew viral and I’ll bring them up in the interview, but I want to hear directly from you what you did and as I said earlier I want to bring some of those lessons to the audience. What gets me as I go through your story is that you’re a guy who didn’t need to do this. Didn’t you have a company before that you sold?

Iain: Yes, I’ve been very fortunate over the years to be involved in entrepreneurship with high growth businesses basically since I was in high school. I suppose the most significant was a company called Perlico, and it was a broadband company. I grew that from 2003 to 2007 to become the 2nd largest supplier of broadband in the Republic of Ireland. As a result of doing that, we grew a very large business very quickly and we sold to Vodafone for about 100 million dollars in 2007. I had a great team with me, we stayed with Vodafone for a period of time but then I took a bit off time off and I got the entrepreneurial itch and I looked for my next idea.

Andrew: You told Jeremy a story about something that happened after you sold Perlico, do you know the story that I’m talking about? Jeremy, of course, the producer here at Mixergy.

Iain: Is he refereeing the hyped disillusionment curve of success and then nothingness after accomplishing something in entrepreneurship?

Andrew: You know it, that’s different from the one I was talking about. Why don’t you start that and I’ll tell you about the second story that I was asking about.

Iain: I was very fortunate when I was developing Perlico to have very good mentors and they were people that supported me in the ups and downs of developing a business day to day and you could, from my perspective, because they themselves had previously developed profitable, strong businesses which they had excited and they had warned me about the hyped disillusionment curve are your very successfully exiting and then you have pretty much nothing to do so, I pretty much didn’t believe them. I said “No way. I’m never going to want to get back to work if I exit out of this business.”

But I found myself in the first couple of weeks after selling company, absolutely delighted and I had lots of things to do and I had lots of time to catch up with my family and etcetera, and that was great. And then after another couple of months it was still pretty good but I began to see my buddies going back to work and there was nobody to play golf with during the day and I found myself walking around a shopping mall one afternoon , it was maybe a year after I had sold the company, and it was mid-afternoon, I was waiting for a dentist appointment, and the shopping mall was filled with mothers and their children and I kind of felt I was skiving off work, I felt like I didn’t belong there.

And at that point I kind of realized, you know what, I need to get back in the saddle and I need a new idea and that started the frustrating entrepreneurial process of trying to find an idea to satisfy your entrepreneurial drive. So that embarked me on the next stage of my career.

Andrew: You know what though, when you’re a first time entrepreneur, you dream of the day when your financially well of enough that you can do something else, that you can do anything else. Now, when you go back to work because your board doing anything else because there’s nothing else that excites you as much as business, what do you look forward to, what’s the one thing that keeps you going on days when it seems like you’re going backwards?

Iain: Myself and Michael, my co-founder, started this business from one room above a bar, which is were a lot of the real estate is in Dublin Ireland, but we started and we said we have an ambition to do good and to make a better place and that sounds a bit ethereal or a bit unspecific but when we hear stories from our users about how their getting new customers for their skill, how their achieving satisfaction and enjoyment as a result of meeting people with whom the can engage with economically, it’s hugely positive and hugely rewarding. We employ 32 people and our team here works well together, we enjoy what we do, it’s tremendously challenging but at the end of the day it’s all a game and we can move forward and we can apply intellectual confidence to problems and solve them and that’s hugely satisfying.

Andrew: I see. All right, the story I was asking about was buying a boat because it wasn’t all bad after [??] right?

Iain: That’s true. My story of buying a boat when you sell a company might be quite different to a lot of other entrepreneurs because when you’re in the middle of developing a high growth business you have no time for anything else. And the commitment has to be 110% and the sacrifice to other parts of your life, your social life, your family life, is very, very significant. So when everyday I was going to work I would drive past the ocean near where I live in Dublin. And I’d drive about three, four miles past the ocean and the sun would be coming up, I tend to come into work quite early. And the sun would be coming up and I’d look out at the ocean and I’d go, God, I really wish I was part of what I could see. Part of the sunrise, part of the wind blowing, part of the waves coming against the shore. I used to think that every day on my way to work, particularly when times were tough.

So, when I sold the business I was on my way in one day and I said, you know what I’m just going to go get a little sailing boat. So, I went and a bought a very small little laser sailing dinghy. It’s a one man sailing dinghy, and I got a couple of buddies who also do that type of sailing as well. So now sometimes I’m on my way in to work and the sun is coming up and the sky is beautiful, red, and I can just get onto my one man sailing boat and get out on the bay and it’s one of the best feelings in the world.

Andrew: All right, I’ve got to believe that is one of the best feelings in the world. I’m inspired by what you’ve been able to do, and I’m inspired by where you are. And I’m also thinking the audience and how they’re inspired and saying to me, Andrew, get on with it. How do we do something ourselves like this. Let’s go through the story of how you did it. And along the way I’ll keep prodding for ways that my audience can do it too, build their audience too.

Iain: Sure, yeah.

Andrew: Let’s start off with the first version. What was the first version of SkillPages? What did that look like?

Iain: So with myself and Microsoft there, we said, you know, we want to get this product to market immediately. And get it out as fast as humanly possible. So there’s plenty of research, there’s plenty of background information which any entrepreneur can do. But I always feel that getting the product out to market and getting feedback immediately makes you better, makes you sharper, makes you progress faster. So the number one thing we wanted to do was just get the product out. So we launched a Beta and we launched it with, what I think is a terrible name.

We called our company Weedle to start with. Weedle. And we launched the platform. It looked red and white, like red and white is the signature of danger. But we just put the site out there. We were embarrassed about it but we said let’s start. And I suppose that’s the biggest message which I could give is, if you are thinking about starting a business then stop thinking, start doing, and just get something out there. And that’s what we did.

Andrew: What’s the name Weedle mean?

Iain: Well, we thought that it was a cool, nondescript name, sort of like Googly, you know, that nobody would really know what it meant. But we could kind of own the word and we could verbalize the word and etc. And so we just said, yeah, okay, we’ll buy that domain. The domain name was available, dot com. So we just said, okay, let’s buy it, let’s launch it. So that was pretty cool. And then we got some users in and we tweeted out kind of the blogger community here. And we got, we (??) about 50 people to come into a room. But there was a lot of interest in what we were doing, surprising, so we got like 150 people into the room.

And then we realized last name that Weedle is actually a character in Pokemon and it is a bug. So everybody was saying, why did you name your site after a bug? And we said, oh well actually we didn’t but that’s interesting information. So, that was our first kind of (??) shot that Weedle might not be the best name. But then we said, well look let’s just plow on with it. And we said let’s expand a little bit. So we started getting users all around the world.

And the next time we get a Tweet from one of our users in Asia and it says, hey you know you guys, one of the terms that you’re using on your site, Weedle, is called tapping. And we use tapping kind of the same thing to tap into your network. But we realize that in Asia to tap somebody means to shoot them in the head, Andrew. So we very quickly realized that that wasn’t the best term.

So, all of this was about just finding our level. Finding what was the best way to work. And we changed the name to SkillPages for a very specific reason. And it’s something that we learned along the way. If you’re developing a site which is an existing concept, you can use a non-descript name. So Amazon, if somebody asked Jeff Beezus what is Amazon, he would say it’s an online book retailer. OK, that makes sense. What is eBay? Oh eBay is an online auction site. Okay, that makes sense.

But if somebody asked Mark Zuckerberg in the early days, what is Facebook? He would have said, well it’s a social network where you can go and you can share things with all your friends. And it’s a kind of a new concept. So Facebook is a name which is slightly reflective of what Facebook actually does. Likewise, Twitter. It’s sort of an omnitopic [SP] reflection of what Twitter does. So SkillPages is more reflective of what SkillPages actually does. And therefore it’s easier for people to understand. Therefore, they’re going to be more likely to use it and more likely to share it.

Andrew: Ahhhh. That makes a lot of sense. If the concept is new, you don’t want to confuse people with this new concept and a new name that’s not descriptive.

Iain: That’s exactly right.

Andrew: I see, you want the name in that case to explain what it is. You mentioned that you had users in Asia of all places who are already using your site and all over the world. How did you get so many users so quickly?

Iain: Well, we launched the platform out of Beta in January of last year, January 20, 11. And we had about 50,000 Beta users at that time. And we expected to have about a million users by the end of 2011. In fact we ended up with over 2.7 million users. This month we added well over half a million users to the platform. They’ll create over a million skill pages on the platform. So how we got it when you boil everything down under it, is to try and develop a product that meets users motivations. That is exact….

Andrew: But, going back to when you first launched it. I mean, it didn’t meet new users motivations yet. It had issues from the name to the words that you use within the site, to the fact that you were inventing a new product that people weren’t waiting for. No one was sitting on their computer waiting for someone to create something just like SkillPages. How did you get the, tell me about the first thousand users. How did you get them?

Iain: Yeah, so we went through (inaudible) friends, buddies (inaudible) invited them around for a couple of drinks and a cup of tea. And we brought them into a room and we showed them what we were thinking about doing. They gave us a bit of feedback and said, we’ll join you and we’ll give you real live feedback. So that night as I mentioned to you we expected about 50 people. We ended up with about 150. And we ran another one like three or four weeks later, we got another 150 people in the room.

Andrew: I’m sorry, and let’s pause right there. So these first 50 or so, the dozens of people that you got together with in life and you talked to them about this new product and you showed it to them. How did you get them in the room together?

Iain: We tweeted this, they knew us, so they maybe knew me. I maybe had a slight advantage because I had a background in entrepreneurship and people would have known me because of that. So, yeah, so they found about it threw (?). You know, we engaged with the community. We went to events, we spoke about the product and our vision for the product even before it was launched. We spoke about it at events.

Andrew: But you got people to all come in at the same time. Was it about 50 people did you say?

Iain: We intended to have about 50, but actually about 150 people turned up.

Andrew: To this live event.

Iain: Correct.

Andrew: Where you were showing them on a screen what your website was.

Iain: Yes.

Andrew: What’s the? I did an event in New York. Now I’m a little higher profile then you are because every day, I mean, you obviously have beaten me with your business, much more successful then I am. So I’m not, this isn’t a competition, but, I’m higher profile and every day I do an interview, people get to see me, I’ve got an audience of people who’s been asking people to connect with me in real life. I did an event in New York, we ended up with maybe 75 people who showed up for drinks and to just hang out. You on just Twitter and talking to your friends end up with 150 people, not for drinks, not for something that’s in their interest, but something that helps you to help you with your website? That doesn’t seem so easy. And I did this in New York where people can show up like that for anything.

Iain: That’s true. Well I guess, you know, where we’re located you know, probably our business is mildly interesting from an outside perspective. I think that, you know, we got a good bit of publicity when we were developing our last business. And we’d be relatively well known because of that. So I think that people were interested at what’s coming next.

Andrew: Was there an incentive or something that you gave people? Like, you’ll give the free access to the site, free booze, free nothing.

Iain: No.

Andrew: Okay.

Iain: We just asked them to pop around. So I don’t know, people are friendly over here and they just very kindly came and gave us some of their time to see what was happening.

Andrew: Okay, so they come in real life, they give you real life feedback. What’s the feedback that you get at that point?

Iain: The feedback is, the concept is great, the execution of it is not great. More feedback was, this has been done before. And people pointed to sites which actually weren’t the same as us. So things like Angie’s List, or they might point to Yale.com in the UK. But that was because they didn’t fully understand our concept. And that’s okay. We take that feedback and we understand that we’re going to have to bring people along in terms of their understanding of what we do. And that was a challenge for us. So we learned from that. And that went on to reflect how we develop the site. So other feedback was, you know, it’s good to have a big ambition.

And we started with a very big ambition. We didn’t want to set out with a site that had a million users. We want to create a site that delivers value for tens of millions of users all over the world. And when you do that, Andrew, in my opinion, people roll in behind you. They kind of want you to be successful. They want to contribute to your success and they want to be part of that success. And that makes them much more likely to give you candid, real life feedback. And to stay with you along the way and to put up with the mistakes that you make.

Andrew: One of the early Beta tests was Sonny Wheeler, am I pronouncing his name right?

Iain: That’s right, Sonny Wheeler, yup. So Sonny was a great guy. And I guess Sonny kind of epitomizes who we wanted to help with SkillPages in that he’s got a very specific skill. He’s a stonemason. So he’ll build walls for you, he’ll build rockery for you, he’ll build stone furniture for you. And his problem was, you know, there’s lots of people who want my skill but they’re all over the world and when they look for me they don’t know where to find me.

So what we did is we said, create a skill page and put yourself up as a stone mason in a place called Trilley [SP]. So, he did that. We optimize people’s skill type and location for Google. So he got found through Google by people who were searching for his skill. Having done that he got presented with multiple opportunities through SkillPages, and one of which was to create, what he’s gone on to call the lovers’ bench. And it was for a woman who wanted to create a stone bench for her husband for their 50th wedding anniversary.

So Sonny kindly took photos of this bench. He called it the Wheedle bench. And he sent us photos which we blogged about. He blogged about it as well, saying that SkillPages was the best advertising money which he never spent. I thought that was a great way in terms of manifesting what we’re trying to do on SkillPages which is to connect people with skills to people that need them.

Andrew: I see. And how did you keep? I’ve been told that I need to keep promoting the success stories on Mixergy. How did you promote yours?

Iain: So what we try and do is get our users to engage in activity in which they’re personally incentivized to do. Not because we’re asking them to but because they want to. So if they create their skill page, which is skillpages.com/their name. Well then, they’re incentivized to share that skill page to their friends, their family, perspective customers. They put it on their brochures, they put it on their business cards. So in effect they’re promoting themselves but actually they’re promoting SkillPages at the same time. And as they update their skill page. So a skill page is somewhere where you’re like a graphic designer, you can say on a Tuesday, oh I just read this great book by Josh Porter on usability. Or I just attended this convention on this Saturday.

You can update that, a bit like a stream of activity relevant to your skill. So it’s a very rich kind of demonstration of what you’re actually involved with. So when you share that, you can share it on Twitter, share it on Facebook. So people are exposing their competence but they’re actually sharing the existence of SkillPages at the same time. So it’s through that avenue that we promote SkillPages. We really do very little above the line promotion. We prefer our users to, you know, be happy with it. And we believe that if they are that they’ll share it.

Andrew: How much money did you invest in SkillPages?

Iain: We put a total of 8.5 million Euro or just over $10 million into the business. And that’s from myself, we also have some very supportive backers, they’re not just investors but they’re backers in the business. They typically are people as opposed to VC although we do have some VC on board. And they’re people who understand the ambition of the business and have experience of developing large scale international business both in Ireland and in Silicon Valley.

Andrew: How much of that money went to advertising to get new users?

Iain: Yeah, very little. So, predominantly our expenditure goes on head count. We employ 32 people. We have to have the best engineering talent in the world in order to scale our business. Like our three million users have imported over 200 million social connections, so it’s like email addresses or Facebook IDs. And that’s a very difficult thing to do. So that’s where the majority of our expenditure goes.

Andrew: When you say very little I keep remembering Mitt Romney here in the U.S. who said, I earn very little from speaking fees. And then people discovered that he earns hundreds of thousands of dollars which for the average person in a year is a lot of money. When you say very little on advertising, how much are we talking about? One million Euro, five million Euro?

Iain: Well we won’t disclose exactly our methodology for user acquisition because it’s part of our competitive advantage and as you say we operate in a very competitive market. But in terms of our user acquisition, our number one source of users in terms of the priorities within the business is just let users enjoy the platform, invite their friends, share on Facebook, share on Twitter. And that’s where the vast majority of people come from.

Andrew: What’s the percentage that comes from viral as opposed to paid marketing?

Iain: It depends market by market. And again for competitive reasons I’m sorry I can’t disclose that. As much as I want to, I can give you the gist of it. But we do operate in an intensely competitive market and I wouldn’t like to, you know, wouldn’t like my shareholders to be calling me up saying what are you giving away state secrets for?

Andrew: All right, so here’s what I saw. Let’s talk a little bit about the viral part of the business.

Iain: Yup.

Andrew: Because that’s a little more visible. I go in and I register. Through this registration process I saw a few viral hooks. Can you describe some of them?

Iain: Yeah, so as users join the platform. It depends on which first time user flow you went through. So we operate about six. And we constantly iterate them so they’re always changing. But typically what occurs is that somebody will join, they’ll be asked for their skills. After being asked for their skills they’ll be asked, are you looking for any skill? And when they do that, the next stage is “well find out if any of your friends know”, and then whatever skill it is they’re looking for. So, know if they know a good dark worker, know a good graphic designer or know a good physical therapist.

Andrew: And that’s the incentive then for them to then to go and tell their friends about skillpages.com.

Iain: Exactly. Especially if there asking their friends “Do you know a good physical therapist?” So, that’s something in which people engage with, it’s normal behavior and so it’s not particularly alien for the user to have to that. So, when somebody does that, a message is sent from Skill Pages to those contacts and always the user themselves prompt that message to be sent. We’d never ever do it without their permission. But when that message is sent, the user is then asked “Your friend John is looking for physical therapist have you got any suggestions?” and, as a result, that encourages them to engage in the platform

Andrew: OK. And so and what I saw was, you asked them to upload their outlook address book, their Gmail address book, their AOL address book etcetera, but out of every hundred people who come to the site how many will end up adding their address books?

Iain: Twenty-five.

Andrew: So twenty-five of the people who come to the site won’t just sign up themselves, they’ll sign up their friends but not just one or two friends, they’ll sign up their address book.

Iain: Yeah, and the average person’s address book is 135.

Andrew: Really? I would have expected so many more.

Iain: Yeah, 135 is the average. Obviously there’s some who have significantly higher and some which are significantly lower.

Andrew: So, let’s take a look at this, if 100 people come into the site, let’s suppose just one 1 out of 100 uploads his whole address book that brings you 135 people to the site.

Iain: No, what that does it brings 135 invited to the site.

Andrew: OK. And how many out of every 135 who are invited how many people….

Iain: It varies market by market and it varies very significantly market by market .So when I say market, that’s both in terms of the geographic location and the skill type. For example, photographers will be a lot more viral than mechanics and geographically developed internet markets, such as the U.S., will typically be less likely to invite their contacts but when they invite, their contacts are significantly more likely to respond. And that will compare to, say, Asia, where your going to have a higher likelihood of the invitation occurring but then the response rates to that invitation are going to be lower.

Andrew: I see. Do you have, for every 100 people; will you end up with 100 more people on the site?

Iain: It doesn’t quite workout that way now so in terms of our viral growth propellant. If you look at just first time user flow and that doesn’t work but when you look first time user flow combined with persisting users or reengaging users well then it’s soon coerces users will have well and away an excess of one someone will have a group much less than one, so it depends. And over time we perfect the platform for different types of users.

Andrew: You call that a growth propellant?

Iain: Yeah.

Andrew: OK, of over one, obviously if you have a growth propellant over it one it means for every new person you get another new person which basically it’s a self-perpetuated business.

Iain: Yeah, and that is the whole grail of virility. When people are thinking about virility, they need to think about network effects, not just virility. So, if you think about eBay, eBay had no virility but a massive network effects, so, they didn’t have a viral of first time user flow or a locked in environment but yet they still grew to be number one because they were the number one in the online auction space. So, a handful of companies have delivered a growth propellant over one or a viral coefficient of over one but you don’t need a viral code of over one to be massive. Sometimes I find entrepreneurs overly focused on that instead of overly focused on winning their market.

Andrew: And that makes a lot of sense. I’ve got more questions about the flow but before I go to the end of the flow let’s talk about how the other five flows are different. You said you had six flows, what’s the difference in the flows?

Iain: So, if we just test, test, test, test, today’s difference s between the six would be different from a week ago or two weeks ago or three weeks so, were testing everything Andrew, from the color of the drawing process, the sequence of the drawing process, the wording of the drawing process where the number of fields on pages what days is being asked for. In our business were extremely matrix driven. We measure 120 matrixes on a daily basis across the business. We tend to refine that down to about 12 that we are particularly focus on, on a point in time but all the time were testing and testing and testing. And what that does is allows, what I call, Darwinian evolution of improvement. It’s not like, what are we going to do now. But rather it’s, here’s what we’re going to try. Maybe it’s right, maybe it’s wrong. Get it out there, try it. If it improves, keep it, if it disimproves [SP], revert to what it was.

Andrew: Okay

Iain: And that allows you to just all the time get slightly better and it stops the scenario of which probably an awful lot of people have experienced of like five members of the team sitting in a room and everybody saying, I think we should do this. Somebody else saying, I think we should do that. Somebody else saying I think we should do the other. Just get it all out, put everybody’s ideas and rank them according to what you think, but then just launch them all, test them, and then the numbers will tell you the right way to go.

Andrew: What tool do you use to test?

Iain: We have our own data warehouse. We’ve built it so it’s built based on Cassandra. And we built it ourselves. We weren’t able to find an off the shelf tool that gave us the level of data which we needed.

Andrew: What’s something that you’re looking for that an off the shelf tool like Visual Website Optimizer wouldn’t have, or Optimizer?

Iain: The attention to detail and the lifetime experience of the user. So you know, you might get a tool which will show you your funnel drain first time user flow. But that doesn’t tell you the whole picture because you’ve got to see, well, you might get certain data drain first and user flow, but what did that user do two months later? And you’ve got to be able to sync all of that data together and run reports on different categories of users such as one particular skill type, age group, location, mix it all up. So in our experience we just haven’t found somebody who would be able to provide that service to us.

Andrew: One of the first books that you counted on when you built the business, back even when it was Wheedle, before it was SkillPages was, Don’t Make Me Think.

Iain: That’s right.

Andrew: Do you still recommend that book?

Iain: Yeah, I do. And I recommend it for the specifics internally. Not just for the concept or the motto. And Don’t Make Me Think is just so obvious. And, you know, for a user the less cognitive payload that the user has when viewing your sites and attempting to achieve their motivation, the less their brain has to work the more likely they are to achieve it. And I think that Don’t Make Me Think encapsulates that perfectly as a philosophy.

Andrew: Okay, so here’s what I’m getting so far. Obviously test, test, test, we hear this a lot. Second I’m hearing that virality works really well when it’s tied into the reason the person’s on the site. The site becomes more useful the more viral the user makes it, right?

Iain: Yup.

Andrew: So if you’re looking for a plumber, it’s in your interest to tell your friends that you’re looking for a plumber on skill pages and what kind of plumber they’re looking for, because one of them is likely to have a friend who can help out.

Iain: That’s it. Exactly.

Andrew: Got it, okay. Alright. And then the other thing that I’m learning about the flow is, at the very end you have a Bing ad.

Iain: Yeah.

Andrew: You say, get 25 dollar. Actually, can you describe what that ad is? And then let’s talk about why that helps the flow and the user acquisition.

Iain: Yup, yup. So what we were doing with that is we introduced an element of monetization which is around gratification. So what we didn’t want to do was to start putting out for like genealogy down the right hand column of the logged in home environment or whatever. Because that’s not in line with our user’s motivation.

Andrew: You didn’t want to do what? I’m sorry, I don’t follow that.

Iain: We didn’t want to put like display ads down the right hand side of the logged in home page. You know, because those display ads are kind of distracting from the users mode of primary motivation. So what we did with the Bing deal was, we said you know, every month we have hundreds of thousands of people joining us. And they are looking to get fanned. They’re looking to get fanned by new customers and new employers. So we said, what could we offer those users that would be gratifying and that they would feel enhancing to their user experience? We said, well what about if we could offer them free ads on Bing or free ads on Google.

And you know, that would enable them to post an ad which would direct to their skill page and that would help them get fanned by more customers, or get fanned by new employers. And they said, that’s pretty cool. And then we said, well what we’re actually doing here is we’re opening up a massive new market of potential advertisers. Because they might use the free ads, experience the product and then top up, continue using paid advertising. So we approached Microsoft and we approached Google and we explained what we were doing in terms of opening up a brand new market of potential advertisers. And that resulted in what you saw which was with Bing. And an offer a drain first time user flow.

It’s also presented elsewhere for free ads on Bing and for everybody who redeems that they’re getting, you know, very positive user experience because they’re getting free ads aligned to their primary motivation. And then we have a relationship with Google which ensures that we can make some money. And because of that we can continue to develop our platform.

Andrew: And it’s part of the registration flow which means that as soon as you’ve paid your money to get the user in the site, the user’s given the opportunity to sign up. So you tie revenue directly back to expenses. And, of course, with the viral loop, you end up getting even more people going through and…

Iain: that’s true.

Andrew: …and making that Bing more valuable. Do you get paid by Bing per every time someone clicks that button that says, yes we want this offer, or do you get paid only when they activate?

Iain: So, I’m subject to the NDAs that are totally wide spread both for Bing on Google. So I’m not allowed to comment about our commercial relationship, but we’re very satisfied with it.

Andrew: And for the end user it’s beautiful elegant. I mean, I thought I was going to have to fill out a whole new form once I said, yes I want to take the Bing offer. I didn’t. It was just, click the Bing offer, Boom you’re done. And move on to the next step. And I’m assuming that in my inbox somewhere is the Bing opportunity, or information on how to take it.

Iain: That’s exactly right.

Andrew: I love that. What else did I want to find out?

Iain: Thank you very much.

Andrew: Sorry?

Iain: Thank you very much. I’m glad you like it. Well what we’re trying to do is satisfy our users so we’ve made sure we’ve satisfied one right here.

Andrew: Does it burn you by the way, before we continue with this, that everyone’s talking about Zarly. I had the founder of Zarly on here. I think we recruited him as a guest on here. Does it burn you that people are talking about Zarly? They’re talking about TaskRabbit. They’re talking about some of these other places to go and get help. But SkillPages is being ignored in the popular conversation.

Iain: Yeah, we don’t mind that. We really don’t mind at all. As long as our user growth is continuing to grow, which is reflective of our ability to gratify our users. We’re really not bothered by wanting to be one upmanship within the PR stakes. In fact I, I sometimes feel that you’re better off not being hugely distracted by doing a lot of PR. And sometimes it can be a bit, you know, just a little bit distracting. So we’d rather just develop our business, deliver a massive successful internet platform and then the PR will take care of itself.

Andrew: Fair enough. The PR is taking care of itself right here with Mixergy.

Iain: Exactly.

Andrew: How are you doing on time? I saw that you were looking up on your, at the top of your computer which tells me that you’re a little nervous. Do you have 15 more minutes? How much time do you have?

Iain: I’ve got about eight more minutes.

Andrew: Eight more minutes. All right, let’s rip right through this thing. All right, so here’s the thing though. You still have an issue where you have a marketplace getting a lot of users of one side and not enough of the other is a challenge. How did you deal with that?

Iain: Yeah, so I suppose we started off by targeting people who had skills and who were looking to get found. So they were in the creative web presence for their skill, thus their skill page. And they use that as a sort of a website for their skill. So they were motivated and gratified because they said, oh I’ve got a web presence for my skill. That’s really cool. And so they were gratified by just doing that. And then as they started being SEO’ed they started getting more people finding them. But the people that were finding them never really came in the early stages to SkillPages. They were just on Google or on Bing, or Yahoo. So those users, and what we call seekers, they actually, we didn’t have to go out and try and get them. All we had to do was fill the directory of skilled people and the seekers look after themselves.

Andrew: OK. And so you get all the… I guess it makes sense to focus on one first and let the others just show, the others is easier. So you get the people who have the skills. Users who are searching find you on Bing, on Google, they end up on the page of the person who has the skill. When it’s time for them to contact them you ask them to basically register so you have another flow in. So every page on the site is another potential advertisement for, not a potential, another ad, for skillpages.com. Every time someone comes in you ask them to register and the whole flow keeps growing. That’s how you get to 3 million people, right?

Iain: Mm-hmm Yup

Andrew: Am I missing anything else? What else am I missing that I haven’t asked about?

Iain: You know what? The way that you encapsulate it there, there’s no mystery to it. You know, that’s pretty much it. And you know, you’ve got to maximize it. It’s like, you can’t expect it just to happen. You must refine, refine, refine, refine, refine, and that’s where the answer is. There is no silver bullet. There is nothing that any of your audience can go out and do today which will result in massive growth in their users tomorrow. It’s hard work. You’ve got to have a team around you that’s dedicated to making it happen. And they’ve got to be willing to put in the hours and the labor and the effort and the meticulous attention to detail. And that’s what delivers you your growth.

Andrew: You watch a lot of entrepreneurs flounder from the outside. If you could look at them and say, or sit down with them and say, here’s my one piece of advice. I’ve built several successful companies here, obviously SkillPages is rocking. I know how to market, how to get users. And the one piece of advice that I would give you is. What would that be?

Iain: Start with the end in mind, is the first thing. So, what I mean by that is get absolutely clear in your mind about where you want your business to go. What scale you want it to be. What market you want it to be in, what customers are you going to look after, how are you going to satisfy your users? And when you have that very, very clear in your mind, come back to where you are right now and work out a sequence of steps. Just work on the next step. That’s it, just work on the next step, and then muck [??] the steps as you go one by one.

But a lot of entrepreneurs kind of move on to action before they think about destination. And I really feel if you get really, really clear about your objective, and our objective in SkillPages is to deliver one place to find skilled people. So in the same way that you go to eBay to sell something or you go to Amazon to buy a book, we want to be the one place to find skilled people. And if we constantly focus on doing that, it keeps us disciplined and it keeps us focused, and an entrepreneur sees gold bars everywhere. And so if you can reduce the number of distractions that you have to achieving your objective, it’s going to make it much more likely that it happens.

Andrew: You had a bit of an obstacle, where you were sending lots of emails. We’re talking about millions of people, which spawns off many millions, even more emails. Can you talk about that challenge and how you overcame it?

Iain: So, this is one of the examples of everything is not going to go perfect in your business. There are ups and downs, and sometimes the distance between up at the top and down at the bottom can be a matter of hours in entrepreneurship. So you’ve got to keep a steady position. When things are good, they’re not really, really good. When things are bad, they’re not really, really bad. Just keep on going. So an example of that was we were growing, and we were very excited by our pace of growth. It was driven [??] of things by email virility [SP].

And we began to increase the volume of emails which had been sent, so our users were sending upwards of half a million, even more than half a million emails a day with invitations to their friends and families to join the platform. And when they were doing that, we were very happy with that pace of growth. But then we came in one day and suddenly our response rate to those emails had collapsed. Our growth stalled very significantly, and we said, ‘What is happening here?’ Totally unexpected. So we checked our correspondence service. It was working. The mail had been sent. We looked at our conversion rates, and we looked at, ‘Is our metrics accurate?’ And it was. We said, ‘What is happening?’

And what happened was we grew so quickly that the ISP said, ‘These guys must be spam,’ and we were switched off by the major ISPs. And what that meant is not that our messages, the invitations which our users were sending, not even that they were going to the recipients’ junk, but they just weren’t going at all. No delivery at all. So we then had to very quickly upscale in an area which we now realize is totally essential for a business like ours, and that is deliverability with an email. So it took us about eight months to overcome that problem. We’ve only recently overcome it.

And it means getting certified directly with the ISPs, adopting best practice, warming up your IPs, having a relationship with ISPs, so that they recognize that you are legitimate and that you abide by absolutely best practice when engaging in any form of correspondence through email. And as a result of that we’ve overcome that, and we’re back on the trajectory. But that’s an example of, I call it, when you’re jogging on the treadmill and somebody throws a couch at you and you’ve got to keep on running. So those sorts of things come to knock you, but you’ve just got to bash through.

Andrew: Somebody throws a couch at you, and you have to keep on running.

Iain: That’s right.

Andrew: OK. All right. Real quick, I’ll say to people, if you want to go beyond interviews to courses taught by real entrepreneurs who teach you how to get new members, how to get new customers, everything that you as an entrepreneur need, taught by people who can really show you how to do it, who have the credibility to teach you how to do it, and a system through Mixergy to make sure that you get it done right, go to Mixergy.com/premium. All right, a final question. Iain, you’ve gone through our whole program here at Mixergy. What do you think of the process? What can we do better? You’ve gone through the pre-interview. You’ve gone now through the interview.

Iain: Yeah. So I think that the experience that I’ve had, which has been very positive, the reason why I suggested doing the interview at all is because I felt the quality of your content was very good, and that’s what differentiates you, particularly the in-depth nature in which you go and a story approach rather than the typical interview. So I’ve been very impressed with your process. I don’t really have any specific comments about how you could improve it. If I did, I promise you I would tell you.

Andrew: All right.

Iain: But I think pre-interview was well worth it and certainly set the tone for the approach that you were going to take, and that’s been very useful.

Andrew: Well, thank you. I appreciate you going through this whole process and also helping our audience by getting into as many details as I could pull out of you. I understand that there’s certain things you can’t talk about it. But when you’re talking about the virility [SP] of your business, I know there are a lot of people whose eyes you opened up and gave them a new way of thinking about how to grow their own businesses.

Iain: I’m delighted about that.

Andrew: Well, thank you. Iain Mac Donald of SkillPages.com, thank you for doing this interview, and thank you all for watching.

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David

Great interview with Iain – as a fellow Irish man im delighted to see an Irish entrepreneur profiled on Mixergy considering the economic problems we’ve being experiencing these past few years. Its inspirational to see someone getting on with it despite the recession. Also id encourage anyone who’s interested in starting a business to do the courses on Mixergy – Andrew your site is fantastic and motivating – im spreading the word throughout Dublin!! Keep up the good work guys!

Trent

Great discussion guys! Thanks. A few good tips on building a marketplace and overcoming the classic Chicken & Egg scenario.

Cheers!

Trent!

http://Simply-social.com.au/ Jesse Peacock

Andrew – I didn’t want to mess about with email and I wanted people to see this.

Everything you teach works.

I’ve tried two different startups, and now one of them has stuck.

I’m now making tripple what I used to earn and I wanted to say thank you.

I’ve just subscribed to premium and I couldn’t be happier.

-Jesse

http://mixergy.com Andrew Warner

Here’s that makes everything I do feel meaningful. Thanks.

http://twitter.com/cspritch76 cspritch76

The Pokemon Weedle thing is funny!! We did the same thing. Turns out that after we bought TimeGears.com, we learned that a Time Gear is also a Pokemon character.

Tom Fang

Andrew, again we discuss the importance (or maybe just an extra benefit) of having mentors, but how do we do that when we are nobodies? We may have a site, but the greater entrepreneurial community has never heard of us, nor do we know where to look. And I don’t know how other people approach relationships, but I personally try to find something that I can do for the other person and that’s how I begin to build the relationship. However, potential mentors (if I knew who they were), I could probably do very little for.

It would be great to find out how these great successes came to establish one or more mentors.